2005 BCSC 83 Estate of Edith Mary Wilcox, Deceased

Before: District Registrar Bouck

Reasons for Decision

Deanna Rivers and James A.S. Legh	Appeared on behalf of the Executors
John Jordan	Appeared on behalf of Rose-Marie Wilcox, a beneficiary
Date and Place of Hearing:	December 9^th, 2004 (½ day)
	Victoria, B.C.

THE APPOINTMENT

[1] The parties appeared before me for a passing of accounts pursuant to the order of Master McCallum made October 28^th, 2004. In addition to methods of service, the order provides that:

“1. the accounts of the executors filed with this notice of motion, in respect of their administration and management of the estate of EDITH MARY WILCOX for the period from September 17, 1996 to September 30, 2004, be audited and passed before the Registrar of this court in Victoria, B.C.;

2. the Registrar recommend a fair and reasonable allowance for the executors for their care, pain, trouble, and time expended in and about the estate in administering, disposing of, arranging, and settling the affairs of the estate from September 17, 1996 to September 30, 2004;

3. the Registrar make a recommendation as to costs;

4. the Registrar make a recommendation with respect to the payment of debts;

5. the Registrar assess legal fees, if challenged by any party;…”

[2] Finally, the order provides that I certify my findings which shall be binding on the beneficiaries without further order of the court.

[3] There appears to be an inadvertent error in the terms of the order. Although the order directs an “assessment” of legal fees, it is apparent that a “review” of such fees was actually intended. For clarity, costs are “assessed” and legal fees “reviewed”. I note that the draft Registrar’s Report provided by the executors’ counsel states that the fees are subject to review, rather than assessment. I have, therefore, approached this matter as a review of the legal bills.

[4] After hearing submissions from counsel, it was decided that the review of the legal bills should be the first step in the passing of accounts.

[5] The balance of the accounting is adjourned pending issuance of these reasons.

[6] The accounts may be consented to by the only opposing beneficiary, Rose-Marie Wilcox, once the issue of legal fees is resolved.

[7] Failing such approval, I direct that Ms. Wilcox identify her objections in the accounting and provide that list of objections to the court and the executors’ counsel in advance of any continuation: Rule 32(14) of the Rules of Court.

THE CHALLENGED LEGAL BILLS

[8] The legal bills in question have been rendered by three law firms:

1. Linge, Carr & Buchan (formerly Linge, Carr & Associates) (per Shannon Buchan)

Total fees & disbursements: $ 9,219.91;

2. MacIsaac and MacIsaac (per Ronald F. MacIsaac)

Total fees & disbursements: $17,565.28;

3. Stevenson, Luchies & Legh (per James A.S. Legh)

Total fees & disbursements: $20,285.76.[1]

[9] The central issue in this part of the accounting is whether the estate of Edith Mary Wilcox is liable for these legal bills either in part or at all.

[10] As will be further described below, the bills relate almost exclusively to the defence of a Wills Variation Act[2] proceeding. Both the executors and the estate were named as defendants in that action. The estate’s liability for these bills may depend on whether bills are for services rendered to the estate/executors, or, alternatively to Ms. Marshman and Mr. Wilcox but in their capacity as beneficiaries.

BACKGROUND

[11] Edith Wilcox died on September 17^th, 1996, leaving four “natural” children including the executors and the opposing beneficiary.

[12] On March 3^rd, 1997, a grant of probate was issued to Roberta Marshman and Robert Wilcox, the named executors in the deceased’s Last Will and Testament.

[13] The Will provides that three of the four children of Mrs. Wilcox share equally in the residue of the estate. Rose-Marie Wilcox was bequeathed the sum of $100 and debts forgiven.

[14] The estate’s main asset is the real and personal property located at 2855 Fandell Street, Nanaimo, British Columbia (“Fandell Street”).

[15] Fandell Street was acquired in or about 1969 with title registered to Rose-Marie Wilcox and her mother jointly.

[16] For most of her adult life, Rose-Marie Wilcox resided with the deceased at Fandell Street.

[17] Apparently there was a falling out as mother and daughter were estranged at the time of Edith Wilcox’ death.

[18] Obviously dissatisfied with the Will, Rose-Marie Wilcox brought an action against her siblings (and others)[3] and the estate of Edith Mary Wilcox pursuant to the Wills Variation Act, R.S.B.C. 1979, c.435.

[19] Ms. Wilcox was largely successful in the action both at trial[4] and before the Court of Appeal.[5]

[20] The statement of claim does not seek any specific relief against the estate but rather requests an order that “there be adequate, just, moral and equitable distribution of the estate.”

[21] On May 29^th, 1997, Ms. Buchan filed an appearance on behalf of Robert Wilcox, Roberta Marshman and the Sadlers.

[22] On June 24^th, 1997, a statement of defence was filed on behalf of these defendants seeking a dismissal of the plaintiff’s claim. As well, the defendants (not the estate) issued a counterclaim seeking the following relief:

“(a) the provisions of the Will of the deceased dated the 22^nd day of December, 1995, be upheld;

(b) that the Executors be allowed to attend at 2855 Fandell Street, Nanaimo, British Columbia, to prepare an inventory of the contents of the said property;

(d) costs;

(e) the equitable remedy of tracing;

(f) an Order that the Plaintiff, Rose-Marie Wilcox pay to the Estate occupational rent in regards to her use of 2855 Fandell Street, Nanaimo, British Columbia;”

[23] Alternatively, the defendants Roberta Marshman and Anne-Louise Sadler sought the following relief:

“(a) an interest in the property located at 2855 Fandell Street, Nanaimo, British Columbia, and more particularly known and described as, P.I.D. 004-268-806, Lot 13, Section 1, Wellington District, Plan 14768, pursuant to Trust principals;

(b) the equitable remedy of tracing;

(c) that the Plaintiff be ordered to pay to the Estate any amounts that the Plaintiff owed to the deceased at the date of death;

(d) an Order that the Plaintiff pay to the Defendants, Roberta and Anne-Louise Sadler, occupational rent in regards to her use of 2855 Fandell Street, Nanaimo, British Columbia;

(e) an accounting as to the amount owed to the deceased by the Plaintiff at the time of her death;

(f) costs;”

[24] As far as I can determine, no appearance was filed on behalf of the estate. However, I note that in subsequent proceedings, the estate is said to be represented by executors’ lawyers.

[25] The trial of this matter proceeded before Mr. Justice Lander in January 1999. On February 26^th of that year, the court ordered that the executors transfer the testator’s interest in the Fandell Street property to Rose-Marie Wilcox and further that:

“the Plaintiff, Rose-Marie Wilcox, will have costs on Scale #3 to be paid by the Defendants, ROBERT LEE WILCOX, ROBERTA LYNN MARSHMAN, ANNE-LOUISE SADLER, and GERRY SADLER, personally and not from the estate;

…the Counterclaim of the Defendant be dismissed with costs to the Defendant by way of Counterclaim on Scale #3 and to be paid by the Plaintiffs by way of Counterclaim ROBERT LEE WILCOX, ROBERTA LYNN MARSHMAN, ANNE-LOUISE SADLER and GERRY SADLER, personally and not from the estate;…” and

“…the Plaintiff… recover costs from and after the date of June 29^th, 1998, payable by the Defendants, ROBERT LEE WILCOX, ROBERTA LYNN MARSHMAN, ANNE-LOUISE SADLER and GERRY SADLER, personally and not from the estate.”

[26] The personal defendants along with the estate issued a notice of appeal on March 23^rd, 1999. On appeal these parties sought to vary the order of Lander, J. to allow the counterclaim and provide that costs of all parties before the court be paid by the estate, or alternatively, borne by the parties themselves.

[27] The appeal was heard on May 23^rd and judgment issued on September 8^th, 2000.

[28] Mr. Justice Lander’s order was varied but only in part. The Court of Appeal upheld the trial judge’s decision to transfer the testatrix’ interest in Fandell Street to Rose-Marie Wilcox.

[29] With respect to costs, the court ordered that:

“1. The Plaintiff shall be entitled to her costs of the trial at scale 3, from the estate of Edith Mary Wilcox also known as E. Wilcox and E.M. Wilcox, only and not from the individual Defendants; and

2. All parties shall bear their own costs of the Appeal.”

[30] I pause to note that Stevenson, Luchies & Legh provided legal services related to the appeal. MacIsaac and MacIsaac provided services primarily related to trial. Linge, Carr & Associates’ services relate primarily to the pre-trial process.

[31] On December 16^th, 2001, Madam Justice Downs ordered the executors to personally pay the plaintiff’s costs of an application brought “on behalf of the estate”. That application had sought joint conduct of sale of the Fandell Street property. The executors were denied costs for their involvement in the application.

[32] As a result of the Court of Appeal’s decision, the plaintiff took steps unilaterally to transfer the estate’s interest in Fandell Street into her name. The respondents objected to this step and made application on May 28^th, 2002 to have that transfer set aside.

[33] Shabbits, J. ordered that the property vest with the plaintiff, but on the terms that Ms. Wilcox not dispose of nor financially encumber the lands without further order of the court or agreement of the parties. The defendants were at liberty to file a certificate of pending litigation in respect of claims to be made by the estate. Ms. Marshman was ordered to personally pay costs to the plaintiff on Scale 3.

[34] Initially the parties could not agree on the terms of the Court of Appeal’s order with respect to costs. To put that difference in context, I will set out the reasons for judgment on the issue:

“d) Costs

[59] The learned trial judge ordered costs to be paid by the appellants personally. In my view the appeal of that order should be granted.

[60] While it was appropriate to name the individual defendants to bind them to the order, the claim really was against the estate, and it is the estate which should bear the costs: Re Vielberg and Jansson et al (1995), 121 D.L.R. (4^th) 485 (B.C.C.A.). The executors were obliged to defend the will and the other parties were all drawn into the litigation by the conduct of the testator. In these circumstances, in my view, Rose-Marie is entitled to her costs of the trial from the estate.”

[35] Unable to reach an agreement, the parties sought leave to be heard by the Court of Appeal on the issue of the executors’ costs in relation to the litigation. The Court of Appeal issued supplementary reasons on October 21^st, 2002.[6]

[36] In those reasons, the Court states:

“[1] The lawyers who appeared before us on an appeal from a judgment given in an action brought under the Wills Variation Act have requested that we hear submissions concerning the executors' costs in relation to the litigation. The executors' costs were not the subject of an order in either the trial court or this Court. Whether the question on which counsel wish to make submissions is one this Court has jurisdiction to decide at this point has not been fully addressed by counsel. To avoid unnecessary costs being incurred in what may well be a futile attempt to reopen the appeal, we have endeavoured to identify the reasons for the dispute over the executors' costs by reference to the material that was before us on the appeal and the correspondence the lawyers have sent to the Registrar of this Court respecting their request for an oral hearing…”

[37] The Court notes that the estate was erroneously named in the writ. That error was addressed by the Court as follows:

“[23] The error of the "estate" being named as a party to the litigation began with the respondent's issuance of the writ and statement of claim. That error was perpetuated in the style of cause on the appeal. It now appears to pervade the way in which the lawyers are approaching the issues that may arise on the passing of the executors' accounts.

[24] The will of Edith Mary Wilcox provided, among other things, for the executors:

(b) To pay out of, and charge to the capital of my general estate all debts and financial obligations for which I may be liable at the time of my death or which may arise by reason of my death, ...

[25] Under Rule 8(14) of the Rules of Court, the executors of the estate were required to be made a party to the Wills Variation Act proceeding. Generally speaking, an executor is required to play a neutral role in the litigation. As a result of having to play a neutral role, an executor generally receives special costs from the estate. However, when the executor is also a beneficiary, the costs must be separated. In Ewasew v. Ewasew (1996), 11 E.T.R. (2d) 309 (B.C.S.C.) those issues were canvassed by Mr. Justice Spencer, who stated:

3 During argument before me, counsel for the Public Trustee, representing two infant beneficiaries, challenged the petitioner's right to have her costs of defending a Wills Variation Act proceeding brought by the widow. That issue was argued by counsel for the petitioner and by the respondent in person and it is appropriate to deal with it now so that when the accounts are passed the Master or Registrar dealing with them will have the benefit of a ruling.

4 The petitioner was both executrix and one of four equal beneficiaries of the estate. As executrix she was required to be joined in the action by Rule 8(14) and bound to come into court to produce information about the estate. She was bound to keep a neutral position between the beneficiaries and the claimant, see In the Matter of the Estate of Ogilvie (unreported) Nanaimo Registry 0114/64, July 15, 1965 per Wootton J. at pp.1 and 2. To the same effect see also Amighetti, The Law of Dependants' Relief in British Columbia (Carswell 1991) at p.148 and also the statement at para. 16.29 of the B.C. Probate Practice Manual (C.L.E. 1984, June 1995 revision). As beneficiary however she was entitled to appear and defend the action to protect her inheritance from the applicant's attempt to win a share of the estate for herself. In this case that is what she did. So also did the two infant beneficiaries by their own counsel and so also did the respondent by her own counsel. The applicant's claim for a share under the will was rejected. The two infants were successful in their counterclaim for maintenance during their minorities.

5 Included in the petitioner's accounts, still to be passed, are her solicitor's three bills totalling $19,703.15. An examination of those bills shows that most of the work represented was in defence of the action to vary the will. They contain no break-down of individual items from which a determination can be made about how much was to conduct the ordinary business of the estate.

6 The reasons for judgment of my brother Parrett in the Wills Variation Act proceedings stated that he "would ordinarily expect that those costs required of her as executor would be paid out of the estate...". In defending the action, the petitioner performed two separate functions. First she brought forward the will and details of the estate for the assistance of the court. Second, she represented her own interests as a beneficiary, just as the other beneficiaries defended their own interests at their own cost. Where a beneficiary is not also the executrix it is clear that her or his own solicitor's costs are payable by the beneficiary and not by the estate. The rule should be no different where the beneficiary is also the executrix, but it will be important to break-out whatever part of the costs are attributable to the executrix's duties qua executrix as opposed to her actions as a defending beneficiary.

7 When the executrix's accounts are eventually passed therefore, the Master or Registrar will be directed not to allow as part of the estate accounts whatever of the petitioner's legal costs were incurred to defend her personal inheritance from attack.

[26] In Mr. Legh's letter, he listed the debts of the estate. The debts shown are: Rose-Marie Wilcox, for costs, $18,000.00; sundry amounts, $11,843.00; trustee fees, $4,534.15; and legal fees of approximately $50,000.00.

[27] We have assumed that the costs of $18,000.00 represent the respondent's assessed trial costs on a party and party basis at scale 3.

[28] As there is no break-down, it is unclear what the amount shown for legal fees of "approximately $50,000" represents or comprises. Whether that sum can be justified when the executors' costs are separated from the costs incurred by Roberta Lynn Marshman and Robert Lee Wilcox in defending their inheritance from the respondent's claims is a matter to be determined when the executors' accounts are passed.” [my emphasis]

[38] Over two years have passed since the Court of Appeal’s decision. Mr. Legh explained the delay in bringing on this passing of accounts on the basis that he is acting primarily pro bono and other paying clients took priority. As well, he is reliant on the expertise of Ms. Rivers in the passing of these accounts.

[39] According to the Stevenson Luchies & Legh trust account (Schedule “C” to the accounts), Ms. Marshman and Ms. Sadler have “loaned” $19,000 to the estate which appears to have been used to pay the Stevenson Luchies & Legh account. The other legal accounts are shown as liabilities of the estate.

THE EVIDENCE

[40] Ms. Buchan has been injured in a serious motor vehicle accident and as such was unable to testify. Mr. Carr, a partner at Linge, Carr & Buchan, gave evidence on behalf of his law firm.

[41] Ronald MacIsaac and James Legh testified as to their respective bills.

[42] None of the lawyers canvassed in any detail the specifics of their fees or disbursements. Indeed, Mr. Jordon concedes that the fees and disbursements appear to be reasonable in all the circumstances. What Mr. Jordan disputes is the obligation of the estate to pay these fees.

[43] Mr. Carr was only able to say that the services described in the bill were rendered and disbursements incurred. He discussed the accounts with Ms. Buchan but was unable to provide any detail as to what services may relate exclusively to representing the “estate”.

[44] Mr. MacIsaac’s evidence is that the services rendered were on behalf of the estate because the executors were obliged to defend the testatrix’ or “estate’s” wishes. He concedes, however, that he did not direct his mind as to what specific aspect of the claim was defended on behalf of the estate.

[45] Mr. Legh’s evidence is that only $4,000 of the total fees charged relate to the “personal” defendants’ prosecution of the counterclaim. Thus, the balance of fees relate to services incurred by the estate.

[46] None of the bills were issued to the estate. Rather, all bills are issued to Ms. Marshman alone or to Ms. Marshman and her siblings.

DISCUSSION

[47] Mr. Jordan submits that all of the legal services, with some minor exceptions, relate to defending the interests of the beneficiaries. Thus, neither Ms. Marshman nor Mr. Wilcox may now claim indemnity for these bills under the guise of their position as executors.

[48] Furthermore, it cannot be said that the estate had any role in defending this claim.[7] Thus, it should not be obliged to pay any of the bills.

[49] Finally, Mr. Jordan submits that it would be a perverse result for the estate to pay these bills when the main asset of the estate is the Fandell Street property. In effect, Ms. Wilcox would be compelled to pay for her siblings’ legal fees with the spoils of her successful lawsuit. Such a result is in obvious conflict with the costs order made (or not made) in the Wills Variation Act proceeding.

[50] Mr. Legh submits that I have no jurisdiction to delineate between fees to be borne by the estate and those to be paid by the defendants personally. My jurisdiction is limited to a determination of whether the fees and disbursements are reasonable in the circumstances.

[51] Mr. Legh further submits that there is a distinction between the costs orders made by the trial judge and the Court of Appeal and the obligation of the estate to pay legal fees. In short, the costs orders made by those courts have no bearing on this review. The executors were obliged to defend the Wills Variation Act action and, regardless of the costs orders, should not be personally liable for the fees attributable to that defence.

[52] I accept Ms. Wilcox’ submissions. First, in my view, the absence of any order requiring the estate to pay the executors’ costs is determinative. Second, I note that the same argument presented by the executors was rejected by the Court of Appeal and is, therefore, res judicata.[8]

[53] It would indeed be an absurd result if the executors, having been denied indemnity from the estate in the Wills Variation Act proceeding, are able to recover such costs in this passing of accounts.

[54] On the other hand, Ms. Marshman and Mr. Wilcox must appreciate this distinction, hence the attempt to distinguish between costs incurred in their role as executors as opposed to beneficiaries.

[55] As a result of the Court of Appeal’s ruling, I am obliged to delineate between the services rendered to the executors in their neutral capacity and those rendered to Ms. Marshman, Mr. Wilcox and their siblings as beneficiaries under the Will.

[56] The distinctions counsel make between the work for the “estate” as opposed to the beneficiaries is not supportable either at law or on the facts of this case. This distinction is made on the false premise that any services rendered in “defending” the Will are by de facto to be borne by the estate.[9]

[57] I am not persuaded that there were any services performed by either MacIsaac and MacIsaac or Stevenson, Luchies and Legh on behalf of the estate. None of the bills were rendered to the estate. It cannot be seriously argued that the estate was the “client” to any of the law firms. The “ordinary business” of the estate does not include defending a Wills Variation Act proceeding. Indeed, the estate should never have been named in the proceeding.

[58] There is no evidence of what services, if any, relate to the executors’ “neutral” role in this litigation. As far as can be determined by the reasons for judgment at both the trial and appeal level, Ms. Marshman and Mr. Wilcox simply defended their inheritance and prosecuted a counterclaim.

[59] The plaintiff relies on Goodman Estate v. Geffen [1991], 2 S.C.R. 353 which states:

“75 The courts have long held that trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred. Reasonable expenses include the costs of an action reasonably defended: see Re Dingman (1915), 35 O.L.R. 51. In Re Dallaway, [1982] 1 W.L.R. 756, [1982] 3 All E.R. 118 Sir Robert Megarry V.C. stated the rule thus at p.121:

In so far as such person [trustee does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.

76 There can be no question that the trustees in this action acted reasonably. They were initially accused of having perpetrated a fraud against the deceased, an allegation which has not won the approval of any of the courts that have heard the matter. They were, however, obliged to defend the action. The appellants were cleared at trial of any exercise of undue influence on the settler and, although they lost in the Court of Appeal on the basis of a presumption of undue influence, they were ultimately vindicated in this court on the basis of the trial judge’s finding that no undue influence had in fact been exercised.

77 Nor can there be any serious question that the appellants in defending the action were acting, nor for their own benefit, but for the good of the trust. For William Geffen, of course, defending the action promoted both his personal interest as well as that of his fellow beneficiaries. While we have not been referred to a case in which trustees seeking indemnification from a trust were also beneficiaries of the trust, I do not consider the co-existing interest of trustee and beneficiary a valid basis for denying costs. Similarly, the fact that the Geffen brothers were acting in the interests of their children, nephews and nieces does not, in my view, case any doubt upon the propriety of their actions.”

[60] That decision can be distinguished on two bases: first, the trustees were found to be acting “not for their own benefit”; second, the defence of the lawsuit was successful.

[61] In my view, the only services rendered with respect to the conduct of the estate are those by Linge, Carr & Associates between the dates of September 17^th and November 12^th, 1996. Thereafter, it is apparent that all services were directed towards the Wills Variation Act litigation.

[62] In the result, fees payable by the estate are limited to those for services rendered between October 17^th and October 29^th, 1996. The value of those services cannot be determined on the evidence. Subject to submissions on the issue, this may be a subject matter at the continuation of this accounting.

“District Registrar C.P. Bouck”

[3] The action also named as defendants the deceased’s step-children and Gerry Sadler, the husband of Anne-Louise Sadler.

[4] Wilcox v Wilcox et al (26 February 1999), Nanaimo Registry No. 16740.

[7] See Vielbig v. Waterland Estate (also referred to as Re Vielbig and Jonsson et al) 121 D.L.R. (4^th) 485 (BCCA) @ paras 40 to 44.

[8] Wilcox v Wilcox, 2002 BCCA 574 @ paras 12 to 28.

[9] See Vielberg, supra, at paras 40 to 44.

Citation:	*Estate of Edith Mary Wilcox, Deceased,*
	2005 BCSC 83